Question: Selbourne Electronics is a relatively new firm making small calculators. Selbourne entered the business with the production of an inexpensive handheld calculator, the ZX-100, which

Selbourne Electronics is a relatively new firm

Selbourne Electronics is a relatively new firm making small calculators. Selbourne entered the business with the production of an inexpensive handheld calculator, the ZX-100, which sells for $15. It has recently added a more powerful version of the ZX-100 called the ZX-200. The ZX-200 sells for $25. The variable costs of producing a ZX-1000 and a ZX-2000 is given in Table 3. Table 3 ZX-100 ZX-200 Labour $3.00 $5.00 Material $6.00 $12.00 Factory overload $2.00 $2.00 Total $11.00 $19.00 Selbourne produces its own circuit boards and purchases all other materials from other firms. The manufacturing of circuit boards is a complex operation, which requires precision equipment. Selbourne has the capacity to produce, at most, 61,000 basic circuit boards per month. One of these circuit boards is used in each ZX-100 calculator. To manufacture the advanced circuit board for the ZX-200 calculator takes three times as long on this precision equipment as the ZX-100. Therefore, if Selbourne made no basic circuits at all, it could produce no more than 20,333 (i.e. 61,000/3) of the ZX-200 boards. Selbourne can manufacture any combination of ZX-100 and ZX-200 circuit boards, as long as the combined production time does not exceed the available capacity. Assembly time for the two calculators is: ZX-100: 0.2 hour ZX-200: 0.25 hour If the company maintains its current two-shift operation, it has available 8000 hours of assembly time per month. The marketing manager has undertaken a detailed study of the calculator market and foresees a monthly demand of 40,000 units for the ZX-100 calculator and 18,000 units for ZX-200. If Selbourne would like to maximize its profit, how many ZX-100 and ZX-200 calculators should it produce? (You may use graphs to solve the problem and use the graph page available or otherwise). Selbourne Electronics is a relatively new firm making small calculators. Selbourne entered the business with the production of an inexpensive handheld calculator, the ZX-100, which sells for $15. It has recently added a more powerful version of the ZX-100 called the ZX-200. The ZX-200 sells for $25. The variable costs of producing a ZX-1000 and a ZX-2000 is given in Table 3. Table 3 ZX-100 ZX-200 Labour $3.00 $5.00 Material $6.00 $12.00 Factory overload $2.00 $2.00 Total $11.00 $19.00 Selbourne produces its own circuit boards and purchases all other materials from other firms. The manufacturing of circuit boards is a complex operation, which requires precision equipment. Selbourne has the capacity to produce, at most, 61,000 basic circuit boards per month. One of these circuit boards is used in each ZX-100 calculator. To manufacture the advanced circuit board for the ZX-200 calculator takes three times as long on this precision equipment as the ZX-100. Therefore, if Selbourne made no basic circuits at all, it could produce no more than 20,333 (i.e. 61,000/3) of the ZX-200 boards. Selbourne can manufacture any combination of ZX-100 and ZX-200 circuit boards, as long as the combined production time does not exceed the available capacity. Assembly time for the two calculators is: ZX-100: 0.2 hour ZX-200: 0.25 hour If the company maintains its current two-shift operation, it has available 8000 hours of assembly time per month. The marketing manager has undertaken a detailed study of the calculator market and foresees a monthly demand of 40,000 units for the ZX-100 calculator and 18,000 units for ZX-200. If Selbourne would like to maximize its profit, how many ZX-100 and ZX-200 calculators should it produce? (You may use graphs to solve the problem and use the graph page available or otherwise)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!